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Fix rates now bank urges

Dampening investor demand isn’t slowing the monthly pace of house price inflation, says ANZ’s latest Property Focus.

Wednesday, June 23rd 2021, 10:23AM

ANZ chief economist Sharon Zollner says this has come as a bit of a surprise and the bank has upgraded its near-term house price forecasts to include a little more momentum.

It has also brought forward the date it expects the Reserve Bank to start raising interest rates by six months to February next year.

“This means mortgage rates are expected to rise a little sooner than before, taking some of the steam out of the housing cycle a bit earlier,” says Zollner.

The report says housing data clearly shows the market is going through an adjustment period following the Government’s policy changes to tax deductibility and the bright-line test.

Exactly what things will look like when the dust settles remains uncertain, says Zollner.

But it’s not just house prices that have been on the up lately. Rent inflation is showing tentative signs of acceleration, with the 0.5% month-on-month in May the fastest monthly increase since March 2019.

“That’s following a few months of average to sub-par rental inflation, meaning the annual change is nothing spectacular, but higher-than-otherwise rents are an unfortunate side effect of the Government’s tax policy changes, but the magnitude of the impact is unclear,” says Zollner.

Interest rates

Rising interest rates will impact households’ ability to service mortgages and pull down spending in other areas.

The report says households’ debt serviceability looks like it will withstand 100 basis points or so of interest rate hikes, but all this debt accumulation means households are very susceptible to an income shock.

Household debt now stands at almost $310 billion compared to $159 billion in 2008.

“Even if higher debt servicing cost jumps aren’t a problem in terms of households being able to meet mortgage payments, they can still crimp discretionary spending and therefore have an impact on the likes of the hospitality sector,” says Zollner.

The report suggests householders start fixing mortgages on longer-term rates now.

“Appealing as lower short-term rates are, they don’t offer certainty for long,” says Zollner.

“We think that certainty is of greater-than-usual value at present and it is worth considering fixing for a longer term, even if it costs more.

“In short, simply selecting the cheapest rate now could work out to be more expensive in the long run,” says Zollner.

Tags: ANZ fixed rate mortgages Mortgage Rates mortgages

« Investors urged to bolt in long-term ratesInvestor mortgage lending waning »

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.24 6.79 6.65
ANZ 8.64 7.84 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.24 6.79 6.65
ASB Bank 8.64 7.24 6.79 6.65
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.24 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.84 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 7.04 - -
Co-operative Bank - Owner Occ 8.40 7.24 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.74 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.69 6.45 6.19
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.75 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.25 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.25 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 ▼8.09 ▼7.59 ▼7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 ▼9.09 ▼8.59 ▼8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.84 7.45 7.25
SBS Bank Special - 7.24 6.85 6.65
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.74 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.04 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.24 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.49 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.89 6.65
Median 8.64 7.29 7.32 6.65

Last updated: 28 March 2024 9:42am

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